You’ve seen the stats, you’ve read the news, and you are likely aware home prices are continuing the trend of increasing in Calgary and area. What they aren’t telling you is that it’s not every area of the city!
The numbers that get released are an average price and when you look at averages this means some areas are growing more, while others grow less. No less than three individuals whom I have talked to in the last month have all been getting excited that prices are going up and have automatically assumed their property values have as well, but this isn’t always the case.
As we have been working on streamlining some of our portfolio and reducing some of the properties we own, I have been looking closer and closer at trends in a couple of areas and these areas have been completely flat or worse. They have shown either no growth or crept downwards a bit in price.
To add to this, inventory levels are continuing to increase around the city and with the upcoming mortgage rule changes, we have the dual problem of more product and fewer buyers. Now before you start to think I am predicting pending price drops, just realize this is something to be aware of, not meant to cause a panic. It may result in a temporary hiccup in sales and prices, but nothing long term.
There is nothing new about inventory increasing in the spring. This quite common occurrence usually starts in March and runs into June and brings not only additional inventory, but additional sales as well. Spring fever tends to be a huge factor with Real Estate every year.
As for the mortgage qualifying changes, this will only have a short term affect on buyers. Yes, it will reduce the number of qualified purchasers, but the purchasers getting pushed out would potentially be setting themselves up for a foreclosure in the future as rates increase. By reducing future foreclosure properties, these new rules will actually help keep prices stable and over time gradually increasing. Within a couple months, these changes will be forgotten.
Now, let’s get back to my original point about not all home prices increasing equally. Since average sales price is based on averages, don’t automatically assume since the average price increased by 3%, your property automatically increased as well. I’m seeing this mistake being made by both home owners and Realtors right now and new listings are coming on board for way too much.
In the one area I am looking at, when you compare the new listings to other properties listed all seems fine, but everything that has actually sold is all about 5% less than these currently listed prices. If you have a property a buyer absolutely loves, you might be able to get away with this as you have the leverage of emotion winning out over logic. However if you either don’t have the time to wait for that person to show up or you just want to sell your property most efficiently you need to have a firm grasp of what properties are actually selling for.
You really need all the facts when evaluating a property you are about to sell, or even a property you are about to purchase. Don’t fall prey to the headlines, make sure you find out what is really happening and as Don Campbell says, “Look behind the curtain!”
